Tax saving schemes

The personal tax year for 2014/15 is due to end shortly on the 5th April 15. If you have maxed out on your pension contributions and used your full ISA allowance, what options are available to a higher earner who wants to get some tax relief via an approved Government scheme?

There are two government approved tax breaks, the enterprise investment scheme and venture capital trusts, both aimed at attracting investment into smaller UK companies.

Both schemes are worth considering if you are a higher rate tax payer, and offer significant tax saving for higher rate tax payers. It is not all one way through, as these schemes often have higher investment risks being in smaller companies. Income tax relief is available on the cost of the investment of up to 30% of any investment, and any gains are exempt from CGT.

VCT investments tend to be more liquid as there is a secondary market in these shares, so you do have an exit route. Both investments require minimum holding periods to qualify for the tax relief of between three to five years, also there are annual limits for investments into these schemes of £200,000 for VCT schemes and £1,000,000 in EIS schemes.